California Flirts with Economic Suicide

By Charles C. W. Cooke

Thursday, January 22, 2026

 

About ten years ago, during the promotional tour for my book, I spoke to a group of conservative students at UCLA. By and large, they were depressed about their state. California, they said, taxed too much and spent too much and passed all manner of stupid laws. It was expensive and complicated and overregulated. Its services were substandard and unfriendly. And, despite this, it kept electing the same people, from the same party, year after year. “California is cooked,” one young man told me. “I simply can’t see how it can be fixed.”

 

Having listened to this for a while, I asked what I assumed was the obvious question: “When you’ve graduated, where do you think you’ll go?” But, apparently, this was not the obvious question at all. “Go?” the students all said, looking at me as if I’d suggested that I might soon transform into a cucumber. “Go? Oh, we couldn’t ever leave California.” The room murmured in resigned concurrence, and I raised my eyebrows in return.

 

For decades, that dynamic was relatively stable: Californians who disliked their state’s governance would complain and complain and complain — sometimes in the most apocalyptic terms — but ultimately conclude that the inconveniences were a reasonable price to pay for the weather, the scenery, the ocean, and the food. If California had Iowa’s climate and topography, it would have emptied out sometime around 2017. But California does not have Iowa’s climate and topography. California is paradise. Ronald Reagan liked to joke that “if the Pilgrims had landed in California instead of back East, nobody would have bothered to discover the rest of the country.” He was right. Were California well-run, it could easily boast half the country’s population — perhaps more.

 

Naturally, California’s government knows this, which is one reason that it has never bothered to improve. Add in that the state hosts the entertainment industry in Los Angeles, benefits from an agricultural miracle in the Central Valley, and houses the tech world in and around San Francisco, and there has always been a seemingly unlimited supply of cash that could be tapped. In effect, California’s lawmakers have been asking the same question as my audience at UCLA: “Go?” “Go?” “You couldn’t ever leave California, and you know it.”

 

One such lawmaker, Representative Ro Khanna, has advanced this argument openly. Responding to the backlash against a proposed “billionaire tax” last month, Khanna wrote on Twitter, “I echo what FDR said with sarcasm of economic royalists when they threatened to leave, ‘I will miss them very much.’” Evidently, Khanna believed that this was a clever line. But, for once, he and his fellow travelers may actually have pushed it too far. If adopted as a ballot measure this year, the tax would confiscate 1 percent of the net worth of all California billionaires — real billionaires, and on-paper billionaires — every year for five years running. Already, California has lost the founders of Google (Larry Page and Sergey Brin), the founder of PayPal and Palantir (Peter Thiel), and the venture capitalist David Sacks — none of whom want anything to do with it. As the Washington Post has observed, their decision to leave was not made solely to save money should the initiative pass, but to ensure that they retain control of their life’s work. “To pay the tax,” the Post notes, “critics say some elites would have to sell large amounts of stock, potentially destabilizing their companies’ value and causing them to lose control.”

 

In advancing his case, Representative Khanna likes to note that his “district is $18 trillion, nearly 1/3 of US stock market in a 50 mile radius.” “We have 5 companies,” he has asserted repeatedly, “with a market cap over a trillion.” The “we” in Khanna’s sentence is telling — not least because it suggests that he believes that the existence of all of those companies is a permanent and ineluctable fixture in California, like the San Andreas fault, rather than an accident of history that has been sustained by a tolerable business environment and extremely strong network effects. But that, of course, is untrue. Indeed, as Garry Tan, who runs the startup incubator, Y-Combinator, has often pointed out, bad policies do not just jeopardize the existence of established companies, they threaten the development of new ones. The billionaire’s tax, Tan submits, would “kill and eat the golden goose of technology start-ups in California.” And what would Ro Khanna boast about then?

 

Astonishingly, California is not alone in its suicidal ideation. Aside from Silicon Valley, the biggest tech hub in the United States is up in Seattle, Wash., which, following California’s example, legislators are currently busy trying to ruin. At present, Washington State has no income tax to speak of beyond a 0.58 percent employer-side tax on payrolls. But, under a proposal being championed by the state’s governor, Bob Ferguson, this would change dramatically. Ferguson wishes to create a “millionaire’s tax,” at a rate of 9.9 percent, that would apply to all income above $1 million. When combined with Seattle’s existing “Social Housing Tax” and “Jump Start Tax,” and added to federal income taxes and payroll taxes, this would force millionaires in the city to pay a marginal rate of just under 58 percent — the highest anywhere in the United States. Worse still, the Tax Foundation records, this rate would apply not only to wage income but to “restricted stock units (RSU) vesting” — an approach that combines “the worst of both worlds for its small business owners, limiting their ability to grow and undercutting job creation.”

 

One might have imagined that, with a potential exodus from California on the horizon, Washington State would be attempting to make itself as attractive as possible to disaffected entrepreneurs. Unlike California, Washington does not have permanently temperate weather, but it does have a tech industry, and, for now at least, it has a tax environment that is more attractive to high earners than many others. That, instead of maximizing its appeal, it is looking down the same road as California, serves as a good reminder of how potent and deaf socialist ideology can be. Florida and Texas have sunshine, too.